AT&T Takes a Leap at Sprint Threat
NEW YORK (TheStreet) -- AT&T
Sprint, now under the control of SoftBank's Masayoshi Son, has a plan to expand capacity and come at AT&T's wireless market share aggressively.
SoftBank has successfully executed this plan in Japan, where it now leads in market share over NTT DoCoMo and KDDI, that country's versions of AT&T and Verizon
If Sprint makes the U.S. market's duo a trio, it will be disastrous for AT&T. The company today gets more than half of its revenue from its wireless unit; thus that unit's market share is critical in its stock valuation. Right now, AT&T is worth 10 times more than Sprint, so as Sprint gains share you would expect that gap to narrow.
AT&T's response to the threat is to try and buy up the rest of the wireless board, creating an oligopoly in hopes of reducing Sprint's ability to compete. This has begun with the purchase of Leap Wireless
As our Antoine Gara noted in writing about the Leap deal, all this is making hedge fund manager John Paulson billions of dollars. Paulson took shares in Sprint, Leap and MetroPCS
With the Department of Justice having started this acquisition game by halting AT&T's plan to buy T-Mobile US
Another way to get around it is by using the spectrum it's acquiring to deliver new services the Federal Communications Commission loves. Thus, AT&T has been teasing an event for tomorrow that Hot Hardware speculates could mean the rollout of a faster LTE-Advanced network created by combining radio channels for faster speeds.
An LTE-Advanced service, based on bigger hunks of spectrum, helps justify consolidation within the space, limiting the number of carriers spectrum can support. AT&T's plan is thus to reduce competition among carriers, which will maintain prices, then match Sprint's network improvements and prices when they appear.